Why the EU Frustrates Italy So Much

(Stratfor)

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If signals from Rome are anything to go by, the Italian government is not satisfied with the way things are going in the European Union and is taking a more defiant stance. In recent days, the government of Prime Minister Matteo Renzi was unusually vocal in its criticism of the union in general and Germany in particular, accusing Brussels and Berlin of having double standards on issues such as the immigration crisis and Europe's strained relationship with Russia. These reproaches do not mean that Rome will change direction in an abrupt way, but highlight the increasingly fraught dynamic between the largest and the third largest economies in the eurozone. If unchecked, this friction could create further problems for the Continental bloc in the coming months.

Italy was in the headlines last week, when Rome asked to postpone a decision to extend sanctions against Russia for six more months, demanding the issue be debated at the European summit of heads of state and government running Dec. 17-18. Then, on Dec.17, the Italian media reported on Renzi's intent to replace Italy's ambassador to the European Union because the prime minister allegedly considers the current representative "too soft" when defending the country's interests on the EU stage.

One factor influencing Rome's behavior is its belief that the European Union is failing to address the immigration crisis. On one hand, Brussels' plan to relocate asylum seekers from Italy and Greece is not working — other countries have accepted only a handful of the 160,000 men, women and children included in the scheme. On the other hand, the European Commission recently threatened to sanction Italy because of its failure to fingerprint every asylum seeker entering the country. Brussels also demanded that Italy build more reception centers to deal with the influx of displaced persons. From Rome's perspective, Brussels is pushing Italy without working hard enough to solve the country's migration pressure.

But what infuriates Italy the most is the perceived double standard shown by the European Union in general and by Germany in particular when it comes to Russia. Italian officials are irritated by the fact that Berlin wants the union to maintain sanctions against Moscow while at the same time defending the construction of the Nord Stream II pipeline. The proposed pipeline will transport additional Russian natural gas to Germany through the Baltic Sea. The Italians are allegedly upset because in 2014 Germany opposed the South Stream project, which would have taken Russian natural gas through the Balkans to Italy.

Rome's concerns are well founded: Italy consumes Russian natural gas, which arrives by pipeline through Ukraine. Since Nord Stream II would bypass Ukraine, the Italians are concerned about their energy supply security. But Rome is also interested in lifting the punitive measures against Russia because Italy is one of Russia's largest trade partners in the European Union and their commercial relationship has been hurt by the various sanctions and counter-sanctions.

Italy wants Russia to cooperate in the process of ending the conflict in Libya as well. From Rome's perspective, Libya — a country only a few hundred miles south of Sicily — is a much more pressing issue than Ukraine. Libya is the departure point for both asylum seekers and potential terrorists heading north, straight to the Italian coast. An end to the conflict in Libya is, therefore, a priority. It's not a coincidence that Italy asked to postpone the vote on EU sanctions on Russia while Russian Foreign Minister Sergei Lavrov was in Rome to discuss the Libyan conflict.

And then there are the domestic reasons behind Italy's recent conduct. Renzi spent most of 2014 restructuring the country's institutional framework, passing a new electoral law and reforming the powers and structure of the Italian parliament. The goal of these changes is to generate more stable governments, thereby ending Italy's perennial political instability. However, the parliamentary reforms will have to be ratified by a referendum in mid-2016. In addition, Rome has introduced tax breaks as well as reducing a controversial property tax. Both moves suggest that, after the new institutional framework is in place, Renzi will be tempted to call for early elections — Italy doesn't legally have to hold elections until 2018.

If and when Italy goes back to the polls, the ruling center-left Democratic Party will be competing against a Euroskeptic opposition. The anti-establishment Five Star Movement has promised a referendum on euro membership, while former Prime Minister Silvio Berlusconi's center-right movement and the far-right Northern League have increased their dialogue regarding a potential alliance. Italy will also hold local elections in several important cities such as Rome, Milan and Naples, creating additional opportunity for populist efforts. While the Democratic Party is the only large pro-EU political force in Italy, Renzi is not immune to the idea that a few doses of anti-German and anti-EU rhetoric would boost his popularity. Italy also constantly negotiates with the European Commission because of its deficit, and Rome could use the many issues on which Brussels needs Italian cooperation (such as the migration crisis and Russia) to extract concessions and be allowed to spend more.

What we have seen over the past week doesn't mean that Italy will radically change political direction in the short term. The Italian government will continue to support a recent plan to create an EU border and coast guard, though Rome will oppose the idea of giving the European Commission rights to deploy border guards against a country's will. Rome will also continue to support Germany's push to redistribute asylum seekers across Europe and the extension of sanctions against Russia for at least six more months.

However, Italy will be one of the main forces pushing for a rapprochement with Russia in the second half of 2016, and a key country to watch during the negotiations over whether to continue the punitive measures against Moscow. Italy's position is crucial because Greece, another country that could oppose continuing sanctions next year, will probably be silenced by the European Union — Athens needs to keep good ties with Brussels because of its ongoing bailout program. Meanwhile, Hungary, another proponent of lifting Russian sanctions, is not strong enough alone to force a redesign of the union's relations with Moscow.

In the coming months, the multiplication of Europe's crises and populist electoral calculations will lead the Italian government to selectively challenge Brussels and Berlin. It will complicate the decision-making process at the EU level, undermining the Continent's already fragmented political landscape.